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NVIDIA Corporation Message Board

  • jbkoadog jbkoadog Feb 15, 2008 1:53 AM Flag

    Option

    If I bought the Feb. 22.50 call tomorrow for .50 and the stock goes up a point will the option go to $1.00 or so even though it's experation day [or is it next week?] No wait, the first was a Fri. the 8th and tomorrow the 15th is the third Fri. Sorry, I have been traving the last few days and am fried. How does that work? Or does the question even make any damn sense. Thanks. Sleep deprived.

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    • First, don't do it. To buy an option with only one day of life is very wreckless gambling. Many believe hedge funds attempt to close the stock's price on a strike price so that they can keep the premiums from puts and/or calls sold. Most options expire worthless, so often you are better off selling options. NVDA looks cheap here, and you can sell the Jun $25 calls for about $2.50. If the stock moves up to that range and gets called away when June options expire, you make $5 or so on a $22.50ish stock in only 4 months, a huge annualized return. I look for these situations and when added together, they can definitely boost your portfolio. A case can definitely be made for just holding the stock long as well.

      • 1 Reply to punbr
      • Thank you for your lucid response. I usually sell calls as you suggested but I wasn't sure if options expire at the open or close on expiration day. I defininatly see the risk. I'd rather hope for a pull back in RIO or something similar that I feel is pretty stable for now, buy a few thousand shares, hope the stock rises a few points and sell some calls even a month out if the premiums look good.

 
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